7.1 Conclusions
For effective purposes, there was a need to introduce new global concepts, including the competence-competence and severability concepts, to tackle the issue of who decides the jurisdiction of the tribunal and make sure that the arbitration agreement is not ineffective.
Further, in order to keep arbitration attractive, it was important to rely on the doctrine of severability to maintain the arbitrator’s jurisdiction and to void several risks to the process of arbitration. However, it was found that in some circumstances unfavorable results may arise when the severability doctrine is applied without limits. Accordingly, to guarantee arbitration effective there is a need to apply the doctrine of severability to give the arbitrators the proper tool to decide any jurisdictional challenge but that doctrine should be applied with some limits. Under the concept of severability certain defects in the Container Contract do not negatively affect the arbitration agreement. It allows the tribunal to rule without affecting its jurisdiction.
The doctrine of Competence-Competence constitutes the basis of modern arbitration which was created on the grounds of necessity to avoid any unnecessary stoppage or suspension to the arbitral proceedings. Under such doctrine the arbitrators are allowed to proceed with arbitration when the arbitration agreement itself is being questioned or challenged by the disputant parties. However, the tribunal’s decision remains subject to revision by the courts.
Further, the domestic courts generally support reinforcing party autonomy. However, close examination of the certain conventions, legislations and international arbitration rules shows that there is no specific definition for the doctrines of severability or Competence-Competence, although they have been widely recognized and acknowledged.
Further, upon examination of certain cases and local institutional arbitration rules, both doctrines of severability and Competence-Competence are generally recognized in the UAE. However, the application of the two doctrines by the UAE courts is unique. The UAE courts may disregard the
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doctrines in case of genuine challenge that the arbitration agreement violates the mandatory rules of the local law or contradicts with the UAE public policy. It is arguable that allowing the said principles to apply without limits may create some technical issues or even will result in a safe harbour to parties who wish to circumvent the effective laws or agree on something that violates the UAE public policy.
It is challenging to any country not to harmonize its local laws according to the international principles of arbitration as the significant benefits of the doctrines of severability and Competence- Competence are undeniable. However, there are always some other factors to be considered including public policy matters. Any challenge against the tribunal's jurisdiction shall be determined initially by the tribunal itself provided that the tribunal’s determination is not final and is subject to variation or cancellation by the court.
The benefit of empowering the arbitral tribunal, under the Competence-Competence doctrine, with all necessary tools to determine all challenges in relation to the arbitrate dispute is very essential.
Nevertheless, it is not logically accepted for a party to be forced to participate in the arbitral proceedings without having agreed in advance on arbitration. On the other hand, the court support is always needed but shall not be regarded as an open door for unnecessary judicial intervention in the process of arbitration.
7.2 Recommendations
We believe there is no short answer to the question of how the doctrines in question should be applied in a specific country. Each country has to consider several issues including its legal framework, the local laws and public policy matters. In the UAE, we think, the principles need to be applied in all cases except when there is a solid challenge to the basis of the arbitration such as when there are valid allegations that the party did not agree on the arbitration agreement.
Therefore, we recommend forming an independent body, which can be in the form of a judicial committee as an independent circuit in courts or linked with the technical office of the Minister of Justice or the Chairman of the court, (the Committee”). The role of this Committee shall be to facilitate the determination of cases relating to arbitration including deciding on matters which fall
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outside the scope of the arbitral tribunal or challenges that may render the arbitration agreement invalid. That Committee shall be entrusted with the needed powers to rule on challenges that cannot be resolved by the doctrines of severability and competence-competence, such as a claim that the contract was not signed by the defendant. However, the scope of the Committee shall be very clear to support the parties’ autonomy and that the Committee shall not exceed its limits or the essence of its formation.
In its ruling the Committee shall review the documents provided on very top level basis and not to decide on the merits of the case. If the Committee finds there is some reason that prevents the arbitration proceedings, as if the arbitration agreement was never formed or the case is not arbitrable, the case shall forthwith be referred to the competent court for determination. However, in case of doubt or if nothing materializes in relation to the arbitrability of the case, the parties shall be referred to arbitration. The decision of the Committee shall be final and issued within a very limited period of time such as two months. The Committee’s determinations shall be treated by the local courts as a judicial final judgment.
For saving the parties rights we, further, recommend that filing the case with the Committee shall (i) affect the time bar to suspend; and (ii) not prevent the parties form recoursing to arbitration or to continuing any pending arbitral proceedings (if any). Moreover, any active participation or attendance before the Committee shall not be regarded by courts as waiver of right to proceed with arbitration.
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5. Cossio F, ‘The Competence-Competence Principle’ (2007) 24(3) JIA
6. Eamon J and Holub G, ‘International Arbitration Law Review, 2009, See you in court!
Respondents' failure to pay the advance on arbitration costs’ (2009) Int. A.L.R. 12(6) 168- 178
7. Haining K and Zeller B, ‘Can separability save Kompetenz-Kompetenz when there is a challenge to the existence of a contract?’ (2010) 76(3) Arbitration 493-502
8. Horn N, ‘The arbitration agreement in light of case law of the UNCITRAL Model Law’
(2005) 8(5) Int. A.L.R. 146-152
9. Hutchinson G, ‘The existence of the arbitration agreement and the Kompetenz-Kompetenz principle in Irish law’ (2014) 80 (1) The International Journal of Arbitration, Mediation and Dispute Management 73-81
10. Jenkins J and Stebbings S, ‘International Construction Arbitration Law’ (2006) Kluwer Law International 163
11. Lew J, ‘Achieving the potential of effective arbitration’ (1999) 65(4) Arbitration 283-290 12. John S, ‘Separability of the Arbitration Provision-Time to Reconcile New York and Federal
Approaches’ (1973) 3 SJLR 550
13. Movsesian M, ‘International Commercial Arbitration and International Courts’ (2008) 18 Duke Journal of Comparative and International Law 423
14. Smit, ‘Separability and Competence-Competence in International Arbitration’ (2002) 13 Am. Rev. Int'l Arb. 19
15. Park W, ‘The Arbitrability Dicta in First Options v. Kaplan: What Sort of Kompetenz–
Kompetenz- Has Crossed the Atlantic?’ (1996) 12 (2) Arbitration Intl 137-159 16. Park W, ‘Determining Arbitral Jurisdiction’ (1997) 8 Am. Rev. Int'l Arb. 133 (3) Online Resources:
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(4) Other Resources:
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3. Dr. Ahmad Al Slqusheiri, lecturing in the course of the arbitrators qualifying, held at Sheratoon Creek Hotel, Dubai, on 11 June 2014
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6. (1990) XV Year Book. Commercial Arbitration 31
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8. Magalet Al-Ahkam Al-Adleya
TABLES OF CONVENTIONS, RULES, STATUTES AND CASES (1) Conventions:
1. The Amman Convention 1987 2. The Cairo Convention 2000 3. The EU Convention 1962 4. The ICSID Convention 1965 5. The New York Convention 1958 6. The Rome Convention 1980 7. The Vienna Convention 1969 8. The Washington Convention 1965 (2) Statutes:
i. Foreign:
1. The English Arbitration Act of 1996 2. The German Code of Civil Procedure
3. The Swiss Federal Statute on Private International Law
4. The United Nations Commission on International Trade Law Model Law on International Commercial Arbitration 1985 with the amendments adopted in 2006 (“Model Law”) ii. UAE Laws:
9. The UAE Civil Transactions Code issued by the Federal Law No. 5 of 1985 as amended (“CTC”).
10. The UAE Civil Procedures Code issued by the Federal Law No. 11 of 1992, as amended (“CPC”).
11. The UAE Commercial Agency Law No. 18 of 1981 as amended.
12. The UAE drat Arbitration Law (“Draft Law”).
13. The UAE Labour Law No. 8 of 1980 as amended (“Labour Law”).
14. The UAE Federal Decree No. 43 of 2006 issued on 13 June 2006.
5. The UAE Ministry of Justice Commentary on the UAE Civil Code.
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6. The UAE Federal Decree No. 31 of 1992 with regard to the Judicial Co-operation Treaty between France and the UAE.
7. The UAE Federal Decree No. 33 of 2000 promulgating the Agreement between the UAE and the Republic of India on Juridical and Judicial Co-operation in Civil and Commercial Matters for the Service of Summons, Judicial Documents, Judicial Commissions, Execution of Judgments and Arbitral awards.
8. The UAE Penal Code issued by the Federal Law No. 3 of 1987 as amended (“Penal Code”).
9. Abu Dhabi Law No. 20 of 2006 concerning the leasing of premises and the regulation of tenancy relationships between landlord and tenant, as amended.
10. Dubai Law No. 26 of 2007 as amended.
15. Law No. 6 of 1997 concerning Contracts of Government Departments in Dubai.
11. Law No. 92 of 1977 as amended by Law No. 7 of 1986 and Law No. 4 of 1988.
(3) Arbitration Rules:
i. International:
1. The American Arbitration Association Arbitration Rules (“AAA Rules”) 2. The London Court of Arbitration Rules (“LCIA Rules”)
3. The International Chamber of Commerce Arbitration Rules (“ICC Rules”)
4. The United Nations Commission on International Trade Law Rules (“UNCITRAL Rules”) ii. UAE:
1. The Abu Dhabi Commercial Conciliation and Arbitration Center (“ADCCAC”) 2. The Dubai International Arbitration Center Rules (“DIAC”)
3. The Dubai International Financial Center-London Court of International Arbitration Rules (“DIFC”)
4. The Sharjah International Commercial Arbitration Center (“CICAC”) (4) Cases:
i. Foreign Courts:
1. Airconditioning & Refrigeration Inc v Lam Kwai Hung t/a North Sea A/C Elect Eng Co 2. Arab African Energy Corp. Ltd v. Olieprodukten Nederland BV
3. Automatic Systems Inc v E. S. Fox Ltd and Chrysler Canada Ltd 4. British Columbia Court of Appeal
5. Buckeye Check Cashing, Inc. v. Cardegna 6. Cecrop Co v Kinetic Sciences Inc
7. Chung v Primequine Corp
8. Continental Commercial Systems Corp v Davies Telecheck International, Inc 9. Gosset Case
10. Dalimpex Ltd v Janicki
11. Instrumenttitehdas Kytola Oy v Esko Industries Ltd 12. Globe Union Industrial Corp v G.A.P. Marketing Corp
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13. Gosset, Case
14. Gulf Canada Resources Ltd v Arochem International Ltd 15. Heyman v Darwins Ltd
16. Kaverit Steel & Crane Ltd v Kone Corp 17. Liu Man Wai v Chevalier (Hong Kong) Ltd
18. Methanex New Zealand Ltd v Fontaine Navigation SA, Tokyo Marine Co Ltd, The Owners and all Others Interested in the Ship Kinugawa
19. Mind Star Toys Inc v Samsung Co Ltd
20. Nanhai West Shipping Co v Hong Kong United Dockyards Ltd 21. Nassetti Ettore SpA v Lawton Development Ltd
22. NetSys Technology Group AB v Open Text Corp 23. ODC Exhibit Systems Ltd v Lee, Expand International 24. Paladin Agricultural Ltd v Excelsior Hotel (Hong Kong) Ltd 25. Prima PaintCorp. v. Flood & Conklin Manufacturing Co 26. Rio Algom Ltd v Sammi Steel Co
27. Siderurgica Mendes Junior SA v “Icepearl”
28. Sojuznefteexport (SNE) v. Joc Oil Ltd.
29. Tai Hing Cotton Mill Ltd v Glencore Grain Rotterdam BV 30. T1T2 Ltd Partnership v Canada
31. Temiskaming Hospital v Integrated Medical Networks, Inc 32. The City of Prince George v A. L. Sims & Sons Ltd
33. Thyssen Canada Ltd v Mariana Maritime SA 34. William Company v Chu Kong Agency Ltd ii. UAE Courts:
a) Abu Dhabi Court of Cassation:
1. Case No. 321/Judicial Year 19, ruling of the Abu Dhabi Court of Cassation of 25 April 1999
2. Case No. 449/Judicial Year 21 ruling of the Abu Dhabi Court of Cassation of 11 April 2001
3. Case No. 22/Judicial Year 22 ruling of the Abu Dhabi Court of Cassation of 3 March 2002
4. Case No. 491/Judicial Year 24, ruling of the Federal Supreme Court of 28 November 2004
5. Case No. 458/Judicial Year 3, ruling of the Federal Court of Cassation of 26 July 2006 6. Case No. 58/Judicial Year 1 ruling of the Abu Dhabi Court of Cassation of 30 October
2007
7. Case No. 89/Judicial Year 2 ruling of the Abu Dhabi Court of Cassation of 29 May 2008
8. Case No. 164/2008, ruling of the Dubai Court of Cassation of 10 October 2008
9. Case No. 108/Judicial Year 3, ruling of the Federal Court of Cassation of 12 March 2009
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10. Case No. 136/Judicial Year 3, ruling of the Abu Dhabi Court of Cassation of 31 March 2009
11. Case No. 873/Judicial Year 3, ruling of the Federal Court of Cassation of 22 October 2009
12. Case No. 170/Judicial Year 4 ruling of the Abu Dhabi Court of Cassation of 28 April 2010
13. Case No. 795/Judicial Year 4 ruling of the Abu Dhabi Court of Cassation of 9 December 2010
14. Case No. 561/2011,ruling of the Abu Dhabi Court of Cassation of 16 June 2011 15. Case No. 353/2011, ruling of the Abu Dhabi Court of Cassation of 24 August 2011 16. Case No. 1283/2010, ruling of the Abu Dhabi Court of Cassation of 11 October 2011 b) Dubai Court of Cassation:
1. Case No. 17/1995, ruling of the Dubai Court of Cassation of 28 October 1995 2. Case No. 320/1995, ruling of the Dubai Court of Cassation of 14 July 1996 3. Case No. 140/1996, ruling of the Dubai Court of Cassation of 15 December 1996 4. Case No. 178/1996, ruling of the Dubai Court of Cassation of 25 January 1997 5. Case No. 167/2002, ruling of the Dubai Court of Cassation of 2 June 2002 6. Case No. 575/2003, ruling of the Dubai Court of Cassation of 20 June 2004 7. Case No. 273/2006, ruling of the Dubai Court of Cassation of 4 February 2007 8. Case No. 47/2007, ruling of the Dubai Court of Cassation of 29 April 2007 9. Case No. 72/2007 ruling of the Dubai Court of Cassation of 10 June 2007 10. Case No. 92/2007 ruling of the Dubai Court of Cassation of 17 June 2007
11. Case No. 133/2007, ruling of the Dubai Court of Cassation of 23 September 2007 12. Case No. 228/2007, ruling of the Dubai Court of Cassation of 24 February 2008 13. Case No. 305/2007, ruling of the Dubai Court of Cassation of 25 February 2008 14. Case No. 148/2008 ruling of the Dubai Court of Cassation of 16 September 2008 15. Case No. 14/2008, ruling of the Dubai Court of Cassation of 23 September 2008 16. Case No. 162/2008 ruling of the Dubai Court of Cassation of 28 September 2008 17. Case No. 164/2008 ruling of the Dubai Court of Cassation of 10 October 2008 18. Case No. 185/2008, ruling of the Dubai Court of Cassation of 24 November 2008 19. Case No. 67/2009 ruling of the Dubai Court of Cassation of 24 May 2009
20. Case No. 169/2009 ruling of the Dubai Court of Cassation of 13 September 2009 21. Case No. 191/2009, ruling of the Dubai Court of Cassation of 13 September 2009 22. Case No. 156/2009 ruling of the Dubai Court of Cassation of 27 October 2009 23. Case No. 38/2009, ruling of the Dubai Court of Cassation of 4 April 2010 24. Case No. 688/2012, ruling of the Dubai Court of Cassation of 12 March 2013 c) Federal Supreme Court:
1. Case No. 285/Judicial Year 21, ruling of the Federal Court of Cassation of 29 May 2001 2. Case No. 92/Judicial Year 25 ruling of the Federal Supreme Court of 8 June 2003 3. Case No. 118/Judicial Year 23 ruling of the Federal Supreme Court of 21 January 2004 4. Case No. 438/Judicial Year 23 ruling of the Federal Supreme Court of 12 July 2004 5. Case No. 546/Judicial Year 24, ruling of the Federal Supreme Court of 7 March 2005